Tuesday, November 18, 2014

NASDAQ waits for hedge funds to make their next move

NASDAQ finally had a modest bit of consolidation on Monday. Futures are bouncing back and forth between slightly positive and slightly negative this morning as traders are completely unsure as to the next move of the markets, whether is be more consolidation, range trading, or a new leg upwards. IOW, the market will open roughly flat and then all bets are off. Then, people will wait to see how the hedge funds and other short and medium-term speculators either maintain or shift their bias between "risk on" (bullish) and "risk off" (bearish.)
One thing is clear though and that is that there is no passionate and committed interest in pushing NASDAQ to a new all-time high exceeding the peak of the dot-com days. That's fine with me. I'd rather see a "slow and steady" market that "grinds higher" and with occasional bouts of consolidation as we have seen recently.
Continued range trading seems the more likely path of least resistance over the next few months, with a mix of a slow grind higher, consolidation, and range trading.
One of the problems for the bearish speculators is that they bet heavily on the recent correction, but failed to comprehend its brevity and how rapidly the market bounced back, leaving a lot of people sitting in a "risk off" posture which left them underperforming their more adventuresome peers. That may leave more speculators a little more prone to take on more risk than they might otherwise do if left to their own personal bias.
-- Jack Krupansky


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